Oracle is positioning itself as a key player in AI infrastructure, boasting contracts with major companies like Meta and Nvidia. However, recent earnings revealed significant financial strain, with a $70 billion market value drop and $10 billion in free cash burned, raising concerns about the company’s ability to sustain its growth.

Despite impressive revenue growth and a massive backlog of committed contracts, Oracle’s stock plummeted 16% after earnings showed negative free cash flow and rising debt levels. The company’s aggressive AI buildout strategy is straining its balance sheet, with Moody’s downgrading its outlook to negative due to concerns about sustainability.

Oracle’s AI ambitions are being tested as its financial struggles come to light. With a debt-to-equity ratio far exceeding industry peers like Microsoft and Amazon, Oracle’s ability to fund its infrastructure buildout is in question. The company’s performance will serve as a litmus test for the broader AI industry’s financial viability.

The latest earnings report from Oracle paints a bleak picture of the company’s financial health despite its robust AI contracts and partnerships. With mounting debt, negative free cash flow, and a credit downgrade, Oracle’s ambitious AI infrastructure plans are facing scrutiny and doubt from investors and analysts alike.

Read more at Yahoo Finance: Oracle’s big AI dreams are freaking out Wall Street